Bookkeeper or Accountant: Who Does What
A side-by-side look at what a bookkeeper normally handles, what an accountant or CPA handles, and how to decide which one your business needs first.
- Filed in
- Close kit
- Form
- Table
- Dated
Contents, 7 sections
The two jobs overlap, and titles are used loosely, so the same task may be done by either one depending on the person and the firm. The table below shows the usual split. It is general information. What a given professional is licensed and allowed to do depends on where you live, so ask them directly and confirm the details in your own jurisdiction.
The usual split
| Task | Bookkeeper | Accountant or CPA |
|---|---|---|
| Recording daily transactions | Usually | Rarely, unless hired for it |
| Categorizing and matching bank feeds | Usually | Reviews |
| Invoicing and bill payment | Often | Rarely |
| Bank and card reconciliations | Usually | Reviews |
| Month-end close | Often | Often, or reviews |
| Payroll processing | Sometimes, or a payroll service | Sometimes |
| Financial statements | Prepares basic ones | Prepares, analyzes and explains |
| Tax return preparation and filing | Generally not | Usually |
| Tax planning and advice | No | Yes |
| Choosing a business structure | No | Yes, often with an attorney |
| Cleanup of past years | Sometimes | Often |
| Audits and reviews of financial statements | No | CPAs only, where licensing applies |
What a bookkeeper does
A bookkeeper keeps the records current. That means recording transactions, categorizing them, reconciling accounts, sending invoices, entering bills and keeping the files in order so the books are ready when someone needs to use them. Bookkeeping is generally not a licensed profession, although there are certifications. Quality varies, so check experience with your software and your type of business.
What an accountant does
An accountant works with the numbers the books produce. That includes preparing financial statements, advising on how items should be treated, planning for taxes, preparing and filing returns and guiding decisions such as hiring, buying equipment or changing structure. A CPA is a licensed accountant; the license is issued by a state board in the United States and carries ethical and continuing-education requirements. In the US, CPAs, enrolled agents and attorneys can represent clients before the tax authority. Credentials differ elsewhere.
When to hire which
- Start with a bookkeeper if the books are behind, you are spending your own hours categorizing transactions, or the business is busy enough that regular upkeep keeps slipping.
- Start with an accountant if you are choosing a structure, expect to owe tax in a way you do not understand, have a question about how an item is treated, or need a return filed.
- Use both once the business has steady activity. The bookkeeper keeps the records and the accountant reviews them, prepares returns and advises. Many accountants prefer clean books and some will work with your bookkeeper directly.
- Do it yourself for a while if volume is small and your software handles most of the work. A chart of accounts and a regular close routine go a long way, and an accountant can look it over once a year.
Questions to ask either one
- Which accounting software do you work in, and do you use my current one?
- Who will actually do the work, and who checks it?
- What does a typical month look like, and what do you need from me by when?
- How do you charge: hourly, a monthly flat rate or by project, and what falls outside it?
- What happens if you find an error in a past period?
- Do you have experience with businesses like mine?
- How do you handle my data and bank access?
Working together
Give both the same access to the books and agree who is responsible for what. Send your accountant questions in a batch rather than one at a time. Before year end, ask what they need from you and by when. Keep a running list of items you were unsure about, which makes the conversation shorter and more useful.
What to watch for
- A professional who guarantees a particular tax result.
- A bookkeeper who wants sole control of bank access with no review.
- An accountant who will not explain a recommendation in plain terms.
- Anyone who prepares returns without signing them, where signing is required.
The words used on this page are explained in the accounting terms list. The final choice of who to hire, and of what each one should handle, is yours, and your accountant has the last word on tax matters.